I came across an article recently encouraging designers, like myself, to include language in their client contracts requesting a compensation fee for providing referrals; also know as “Affiliate Agreements.” Generating passive income through referrals isn’t a new idea for me, but formalizing as part of my contracts is.

One of my former clients, a services broker, encouraged me to request a percentage of the profits from every successful referral I provided. This was the first time I encountered this type of agreement and it made me feel awkward asking my clients for money whenever they benefited from one of my referrals. At the time, I assumed my uneasiness was the result of being a novice business owner and/or ignorance about standard business practices.

transactional vs. relational

I’m still uneasy about affiliate agreements so I don’t use them but I’ve come to realize it’s the result of my approach to networking and business, and not ignorance. I see referrals as relational, not transactional. I focus on building relational equity through giving referrals. That doesn’t mean my time isn’t valuable but I reflect that value in how I structure my compensation when creating proposals.

Conversely, I’ve experienced the reality of sending several successful referrals to a single client and/or vendor and never receiving even a simple thank you email. Should that affect my future decisions on whether to continue sending referrals to that client? Or should sending referrals be done altruistically and without judgement?

Being “paid” for referrals doesn’t necessarily need to involve a cash transaction. There are many ways your referral recipients can show their appreciation. Here’s my list:

Gamut of Referral Appreciation:

• a thank you email or text

• a handwritten thank you note

• a gift card

• a seasonal gift (for the duration of the client relationship)

• a one-time cash payment (fixed rate)

• a cash payment based on a percentage of project value

• establishing a retainer

Do you think there’s anything missing from this list? Which of these would you prefer to receive? Which of these would you be comfortable requesting as compensation for sending a referral?

What do you think?

If you’re interested in voicing your opinion on the topic of referrals and affiliate agreements, I’ve created a short survey here and I would love to know your thoughts!